An Open Letter to the Virginia General Assembly: Repeal the Transportation Tax Hike!

August 29, 2013

Dear Legislator:

On behalf of National Taxpayers Union’s (NTU’s) 9,300 members in the Commonwealth of Virginia, I urge you to repeal the $5.9 billion transportation tax increase passed by the General Assembly and signed by Governor McDonnell earlier this year. This hike is a “lose-lose” for taxpayers and the state economy, and signals that elected officials are unwilling to rein in state spending, which ballooned by 94 percent—from $22 billion to $43 billion annually—between 2000 and 2012.

The new law increased the Virginia sales tax from 5 to 5.3 percent (6 percent for Northern Virginia and Hampton Roads), implemented a 3.5 percent wholesale gas tax and 6 percent tax on diesel fuel, and raised car registration fees. In truth, these new “fees” are taxes, as they are not dedicated to road construction. Rather, they will fund mass transit projects, such as passenger rail between Lynchburg and Roanoke, the Norfolk light rail, and Metro’s Silver Line, a costly project that began nearly four years ago.

Yes, Virginia’s transportation financing is in desperate need of restructuring, but the law Gov. McDonnell championed follows the wrong approach by raising taxes on all Virginians and unfairly shifting the burden of taxation. Furthermore, it relies on Congressional passage of dangerous online sales tax legislation to reach even deeper into Virginia taxpayers’ wallets, (at an estimated $1.1 billion). Encouraging adoption of the so-called Marketplace Fairness Act would make Virginia part of a predatory tax collection scheme that will ultimately hurt small Internet-based businesses, and undermine the principles of tax competition that have benefitted the Commonwealth.

Virginia legislators should overturn this tax hike and explore other positive approaches that could be taken to improve infrastructure in the Commonwealth. For example, the way in which Virginia’s transportation funding is allocated (with an excessive proportion devoted to transit) should be given more attention. Additionally, lawmakers should look to strengthen public-private partnerships made possible through the Public Private Transportation Act (PPTA) of 1995. Thanks to the PPTA, the $1 billion I-95 Express Lanes project, which began in July 2012, required only $70 million in state funding. Policymakers should increase the number of these partnerships in the Commonwealth, which have saved billions of dollars and years of construction time.

NTU’s members hope that lawmakers will repeal this tax increase and support pro-growth policies instead, such as the income tax cuts enacted in neighboring North Carolina this summer. With no tax relief from Washington, D.C. in sight, Virginians are looking to leaders in Richmond to reduce their heavy burden of taxation.

Sincerely,Lee SchalkState Government Affairs Manager

cc: Governor Bob McDonnell

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